Latest / Markets with Megan: A Quick Financial Markets Update / Good or Not? December Durable Goods Data | S2 E005 | 01-28-25

Transcript

Good or Not? December Durable Goods Data | S2 E005 | 01-28-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We got one of those reports this morning that, on the headline, looks really poor for the economy.
• 0:06
  Megan Horneman: It is Tuesday, January the 28th, and this morning we got the preliminary reading on durable goods orders.
• 0:13
  Megan Horneman: And this is important because durable goods orders go directly into the GDP calculation and what we saw is at the headline level, which includes there's no X-ing out of aircraft or anything.
• 0:24
  Megan Horneman: At the headline level it's been the third consecutive monthly drop and it was much worse than expected.
• 0:30
  Megan Horneman: The survey had actually expected it to be up six-tenths and it declined by 2.2% and was revised lower in the prior month.
• 0:38
  Megan Horneman: Now this is where we got to kind of decipher what's good news, bad news, what's the headline and what's the true underlying rating.
• 0:46
  Megan Horneman: Now durable goods orders can be quite noisy because it does include not only defense aircraft but non-defense aircraft and what we saw for December non-defense aircraft actually fell 45.7%.
• 0:58
  Megan Horneman: It's down 46% on a year-over-year basis.
• 1:01
  Megan Horneman: So that dragged that headline level down on a year-over-year basis.
• 1:06
  Megan Horneman: So that dragged that headline level down.
• 1:07
  Megan Horneman: But if you look at capital goods orders, excluding defense and aircraft, that actually rose 0.5% for the month and that was better than expected.
• 1:14
  Megan Horneman: The expectation was that it would be at 0.3% and it was even revised a little bit higher in the prior month.
• 1:20
  Megan Horneman: So what this is telling us is we should have a good input into the fourth quarter GDP.
• 1:26
  Megan Horneman: This is the preliminary reading, though this is subject to change.
• 1:32
  Megan Horneman: From a market perspective, equities are getting a bit of a rebound today after that tech-led sell-off yesterday with the news coming out of China and with their AI developments.
• 1:43
  Megan Horneman: But here in the US, from the fixed income side, we're seeing today that the yields are backing up a bit, because this was a good report from an economic standpoint.
• 1:51
  Megan Horneman: And then we have the Fed meeting tomorrow.
• 1:53
  Megan Horneman: What will this do for the Federal Reserve?
• 1:55
  Megan Horneman: We don't think that the Fed's going to make any adjustments to monetary policy.
• 2:00
  Megan Horneman: We think that they'll stay on hold, and it's the statement that we're going to have to pierce through to see exactly what the future of Fed rate cuts look like.
• 2:08
  Megan Horneman: So, again, a pretty decent report for the economy to close out 2024.
• 2:13
  Megan Horneman: And we will be back tomorrow with some the information out of the Federal Reserve.
• 2:17
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• 2:21
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• 2:24
  Megan Horneman: Also, if you want a history of our podcast, you can go to marketswithmegan.
• 2:27
  Megan Horneman: fm.
• 2:29
  Megan Horneman: Thank you.